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Jon Corzine caught up as MF Global inquiries escalate

Each morning this week has brought a new batch of revealing details about what brought down MF Global, the trading firm run by former U.S. senator and Goldman Sachs Chief Executive Jon Corzine.

Since the firm declared bankruptcy Monday morning, we have learned the Commodity Futures Trading Commission and then the Federal Bureau of Investigation were investigating allegations of misused customer funds.

Today, it is the Securities and Exchange Commission that is reported to be opening a probe, according to the Wall Street Journal. The SEC is said to be looking at whether Corzine misled its investors as the company's share price was in freefall.

The case has raised questions about why regulators did not notice MF Global problems sooner. After all, critics say, MF Global was done in by the type of highly leveraged bets that regulators should have been very familiar with from the demise of Lehman Brothers and Bear Stearns in 2008.

Reuters reports today that Wall Street's industry-funded regulator, the Financial Industry Regulatory Authority, started asking questions back in June, but that it was not enough to get MF Global to scale down its bets on the sovereign debt of struggling European nations.

Some of the traders wondered if they should heed the emperor. He was oddly attired and his beard was gray. Perhaps he is just reliving past glories, they thought to themselves. But the emperor showed them the label sewn inside his worn-out suit. “Goldman,” they said admiringly. “They are the finest of weavers. We were wrong to doubt him.”

Shortly afterward, a messenger arrived from far-off lands with tales of great events. The grand emperors of France and Germany had settled an argument and lent florins to the southern kingdoms that had debased their currency. "We should load up," Emperor Corzine cried. “We must trade in size. Here,” he told the treasurer. “Borrow 40 more bags of coins like this one. Wear my cloak and no one will refuse you."

Corzine himself is contending not only with embarrassment and investigations, but also with the prospect that his $12-million golden parachute may not launch, according to Fortune.